Filling in the Blanks on Ethanol

Local Viewpoint by Kelly Brunkhorst, Director of Research, published in Thursday, April 28, Lincoln Journal Star

J. Patrick Boyle’s editorial Corn ethanol: Burning up food budgets may make a couple valid points, but he omits many facts that need to be part of the discussion on corn ethanol. 

Although I agree that floods, droughts and a growing middle class in developing countries may account for some of the factors nudging food prices upward, the largest and perhaps most important factor – and one that Mr. Boyle left out – is the price of crude oil.  Oil and gas prices are rising at a time when our nation is trying to crawl out of a recession, and those higher prices trickle through to every product in the grocery store because of higher transportation, processing and packaging costs.  Yet, one industry across the state of Nebraska and the nation, is providing an alternative to the $100 million dollars we export to OPEC and other countries for foreign oil every day—corn-based ethanol. 

In the United States, we are utilizing just over 4 billion bushels of corn on a net basis, to produce a clean burning fuel that in turn is reducing the billion dollars that we export for foreign oil.  Corn used for ethanol accounts for less than 29 percent of the total corn supply.  (Yes, just 29 percent!)  Mr. Boyle and some others like to use scare tactics by inflating numbers and omitting the fact that only starch from the corn kernel is used to make ethanol, while the remaining portion is distillers grains, a high value, feed co-product.  Distillers grains replaces a portion of the corn and other protein sources in livestock rations, and has become a sought after addition to beef, dairy, hog and poultry rations across the U.S. and the world.  Specifically in Nebraska, distillers grains have been selling for an average of 85 percent the value of corn, but when incorporated into a feed ration can provide upwards of 130 percent the feeding value of corn.  That makes it a bargain for livestock producers, especially considering the increased average daily gains in beef cattle and the thousands of dollars that saves cattle feeders annually. 

Mr. Boyle is correct when he says farmers and ranchers are reducing the number of livestock they are raising.  Unfortunately cattle herd numbers in the U.S. have been on a steady decline since the 1970s, thirty years before the advent of today’s corn ethanol industry, another point Mr. Boyle leaves out.  He also fails to recognize how much more productive beef and pork producers are today – something he is well aware of considering his organization, American Meat Institute, represents the corporate packers who buy those animals.

In a recently released report, Bruce Babcock and Jacinto F. Fabiosa of Center for Agriculture and Rural Development state that the results of their analysis “implies that ethanol subsidies have played a minor role in determining the size of the corn ethanol industry. Thus, ethanol subsidies have contributed little to corn prices or to food price inflation.”

The USDA recently released updated figures on where your food dollar goes.  On average only 11.6 cents goes back to the farmer, which is down from the previous analysis.  Where does most of your food dollar go? To food services and food processing, the very members of Mr. Boyle’s American Meat Institute.

Filling up the car with E10 or filling a flex fuel vehicle with E85 provides a tremendously positive impact in rural communities, the state and nation as a whole, and the environment.  Ethanol helps keep gas prices lower than they otherwise would be—it’s produced right here in Nebraska from Nebraska corn and is certainly helping lead us down the right path to energy independence.

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